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CO-OWNERS AGREEMENT

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CO-OWNERS AGREEMENT

    CO-OWNERS AGREEMENT

    THIS CO-OWNERS AGREEMENT, made and entered into as of the [DAY OF MONTH] day of [MONTH], [YEAR], by, between and among [NAME OF CO-OWNER 1], [NAME OF CO-OWNER 2], and [NAME OF CO-OWNER 3], each of whom is hereinafter referred to individually as a Co-Owner or by name, and collectively as the Co-Owners.

    A. RECITALS

    The Co-Owners presently own in the proportions hereinafter set forth that certain [FOAL YEAR] [BREED] [COLT, MARE, FILLY, GELDING, STALLION, etc.], [NAME OF

    HORSE], by [SIRE] out of [DAM] (the Horse); and

    The parties desire to set forth their respective ownership rights and obligations with respect to the Horse.

    For and in consideration of the foregoing premises and the mutual covenants and undertakings of the parties hereinafter set forth, it is hereby agreed as follows: B. PARTNERS OWNERSHIP INTEREST

    The Co-Owners acknowledge and agree that their respective ownership interest percentages in and to the Horse are as follows:

    Name Percentage

    _______________ _______________

    _______________ _______________

    _______________ _______________

C. LOCATION OF HORSE

    The Horse is currently located in [ADDRESS WHERE HORSE LOCATED] and will be shipped soon to such track as may be determined best for his racing career. D. ADMINISTRATIVE MANAGER

    [NAME OF ADMINISTRATIVE MANAGER] is hereby appointed Administrative Manager of the Horse (the “Administrative Manager”). The Administrative Manager, shall

    have, with advice and consultation of the other Co-Owners, the responsibility for administrative matters related to the racing career of the Horse.

    The Administrative Manager shall not be paid any compensation for his services. However, the Administrative Manager shall be reimbursed for all reasonable maintenance expenses of the Horse on a pro rata basis by the Co-Owners, based on their respective percentage ownership interests in the Horse.

    The Administrative Manager shall devote only such time, effort and skill as, in his sole discretion, he deems necessary for the efficient and successful administration of the racing _____________________________________________________________________________________________ CO-OWNER’S AGREEMENT - Page 1 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

    career of the Horse. The Administrative Manager shall not be liable to any of the other Co-Owners for any loss arising out of or in connection with the Administrative Managers efforts

    except by reason of the willful misconduct or fraud of the Administrative Manager. If the Administrative Manager shall be made or threatened to be made a party to any action or proceeding by reason of the fact that he is or was the Administrative Manager of the Horse, the other Co-Owners, pro rata in accordance with their respective ownership interest percentages, shall and hereby agree to defend, indemnify and hold harmless the Administrative Manager from and against any and all judgments, liabilities, fines and expenses, including attorneys fees,

    actually incurred by the Administrative Manager as a result of such threatened or actual action or proceeding or any appeal therein, as long as the Administrative Manager acted in good faith for a purpose which he reasonably believed was in the best interests of the Co-Owners. The Administrative Manager shall have fiduciary responsibility for the safekeeping and use of all funds and assets of the Co-Owners in his immediate possession and control, and he shall not employ, or grant permission to another to employ, such funds or assets in any manner except for the exclusive benefit of the Co-Owners.

    E. TRAINER

    The Horses initial trainer shall be [NAME OF TRAINER] and the trainer shall have the responsibility for training instruction, selection of races in which the Horse shall be nominated to start or shall start, and all other similar matters reasonably related to the Horses racing career,

    all subject to the ultimate control of the Co-Owners. The Co-Owners shall further have the right to terminate the services of the trainer at such time as they deem it appropriate. F. NAME AND COLORS IN WHICH HORSE WILL RACE

    The Horse shall be raced in the name and colors of [NAME OF PARTNER] unless racing rules or administrative inconvenience shall dictate otherwise, in which event the parties agree that the Horse shall race in the name and colors of [NAME OF PARTNER] and this shall then constitute a racing lease of the Horse to [NAME OF LESSEE] in consideration of One Dollar ($1.00). The parties shall cooperate with respect to licensing.

    G. RESTRICTIONS ON CERTAIN ACTIVITIES

    Except with the consent of the Co-Owners as determined under the Section P of this Agreement, the Horse shall not be (i) entered in claiming races where title to the Horse may be claimed by third persons, or (ii) syndicated, sold, or otherwise placed at stud, or (iii) placed under any arrangement whereby seasons to or other interests in the Horse are sold. H. MAINETENANCE EXPENSES

    Maintenance expenses for this purpose shall include boarding fees, feeding costs, veterinarian fees, medical costs, farrier costs, training and grooming expenses, equipment rental costs, record keeping and accounting costs, registration fees, liability (but not mortality) insurance premiums, pasture leasing, transportation expenses, stakes payments, entry fees, and other similar expenses reasonably necessary for the Horse; provided, however, that any advertising or similar expenses must be approved by all Co-Owners and no expenses for travel, lodging, meals or similar items shall be charged by the Administrative Manager or any of the _____________________________________________________________________________________________ CO-OWNER’S AGREEMENT - Page 2 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

other Co-Owners.

    The Administrative Manager shall bill the Co-Owners for their respective pro rata shares of reasonable maintenance expenses on an approximately monthly basis and shall supply each Co-Owner in reasonable detail backup information and invoices for such expenses. Each Co-Owner shall have the right, upon request, to audit the Administrative Managers records with

    respect to the maintenance expenses and earnings of the Horse.

    I. INITIAL CONTRIBUTION

    Contemporaneously with the execution of this Agreement, each Co-Owner shall contribute [WRITE OUT AMOUNT] [$ DOLLAR AMOUNT] to the Co-Ownership for

    purposes of providing for maintenance expenses related to the Horse. Such payment shall be made by check payable to the Administrative Manager, who shall open a separate bank account for purposes of paying expenses and collecting income for the Co-Owners.

    J. DEFAULT

    If any of the Co-Owners fails to pay his pro rata share of additional expenses that may be required within thirty (30) days after receipt of request therefor accompanied by appropriate backup information, the other Co-Owners shall have the right, but not the obligation, to cover such default pro rata in proportion to their respective ownership interest percentages in the Horse. In that event, any unpaid balance owed by a defaulting Co-Owner shall bear interest at eighteen percent (18%) per annum in favor of the Co-Owner(s) making such payment for the defaulting Co-Owner. Further, the defaulting Co-Owner grants to the Co-Owner(s) making such payment a security interest in his interest in the Horse to secure payment which shall be deemed perfected by the possession of the paying Co-Owner of the Horse.

    K. HORSE EARNINGS

    All earnings of the Horse shall be shared among the Co-Owners pro rata in accordance with their respective ownership interest percentages. The Administrative Manager shall distribute the Horses earnings (less a reasonable reserve for anticipated expenses) to the Co-Owners not less often than quarterly. Distributions, where appropriate, shall be accompanied by reports of all races in which the Horse was entered, which reports shall include the date of race, track condition, starting gate, finishing position, final odds, and winnings. L. NO RESTRICTION ON OTHER ACTIVITIES

    None of the Co-Owners shall be subject to any restriction whatsoever concerning other activities or direct or indirect business interests, whether or not in conflict with the business of owning the Horse or with the duties and responsibilities of such Co-Owner to the other Co-Owners. If the Horse is sold at public auction, any Co-Owner may bid for his individual account.

    M. INSURANCE

    Each Co-Owner may insure or fail to insure the mortality of his respective interest in the _____________________________________________________________________________________________ CO-OWNER’S AGREEMENT - Page 3 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

    Horse at his individual cost and expense, and in accordance with what he feels to be in his own best interest. No Co-Owner, including the Administrative Manager, shall be responsible to any other Co-Owner for securing or paying for such mortality insurance, unless otherwise agreed in writing. In the event, however, that the total amount of available or obtainable mortality insurance on the Horse is less than the total amount desired by all of the Co-Owners, then each Co-Owner shall obtain only the applicable percentage of the total amount of available or obtainable mortality insurance that is proportionate to such Co-Owners percentage ownership

    interest in the Horse. The Administrative Manager will allow reasonable insurance examinations to be performed on the Horse and upon request will cooperate with the other Co-Owners, the insurance company and its representatives to enable insurance to be written on the Horse.

    The Administrative Manager shall secure a general liability policy or other insurance he believes appropriate and in such amount(s) he believes appropriate on behalf of each of the Co-Owners, with the cost of such insurance being included as a maintenance expense of the Horse payable by the Co-Owners as provided above in Section H.

    N. REGISTRATION OF HORSE

    The Administrative Manager shall forthwith cause the Horse to be registered with [BREED REGISTRY] in the names of the Co-Owners.

    O. SALE OF INTEREST IN HORSE

    If any Co-Owner desires to sell or dispose of any of his interest in the Horse, such Co-Owner shall be required to first notify the other Co-Owners in writing of the price and terms thereof and the name of the prospective purchaser. Such notification shall constitute an offer to sell that interest in the Horse to the other Co-Owners at the same price and terms. The other Co-Owners shall have twenty (20) days after receipt of such notice to purchase such interest in the Horse at the same price and on the same terms. If more than one of the other Co-Owners desire to purchase, the purchase effected by such purchasing Co-Owners shall be pro rata in proportion to their respective percentage ownership interests in the Horse. If the offer is not accepted by any of the other Co-Owners, then the Co-Owner desiring to sell such interest in the Horse shall have the right to complete the sale on the terms and to the party described in the notice within ninety (90) days from the date of such notice. Any purchaser of such interest in the Horse shall then be bound by the terms of this Agreement; and any such purchaser shall be required, as a prerequisite to completion of such sale and to recognition by the other Co-Owners of such purchasers ownership interest in the Horse, to execute such documents as may be necessary, in the reasonable discretion of the Administrative Manager, to evidence such purchasers

    acceptance of this Agreement and agreement to be bound to the terms hereof. If such sale is not completed within such ninety (90)-day period or if the terms change, the selling Co-Owner must once again re-offer such interest in the Horse to the other Co-Owners before selling such interest. P. VOTING RIGHTS

    Except as hereinafter set forth, all decisions of the Co-Owners shall be made by a majority in percentage ownership interest vote (51%, or at least [NUMBER OF VOTES] votes _____________________________________________________________________________________________ CO-OWNER’S AGREEMENT - Page 4 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

    based on the current ownership), including the decision to sell a 100% interest in the Horse.

    However, the Administrative Manager may be replaced by a [PERCENTAGE]

    percentage ownership interest vote (votes based on the current ownership), and any amendment of this Agreement shall require the unanimous written consent or agreement of the Co-Owners. Q. CO-OWNERSHIP, NOT PARTNERSHIP

    The parties agree that the relationship established hereby is one of co-ownership of a chattel, the Horse, and is not one of partnership. Further, if for tax purposes the operations conducted hereunder are regarded as a partnership, the parties and their assigns hereby elect to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as amended, and elect not to be treated as a partnership. The parties agree to report that proportionate income on their individual tax returns as required by law.

    [Alternate Provision: For tax purposes only, the operations conducted hereunder shall be deemed a partnership and partnership tax returns shall be filed. For all other purposes, however, this Agreement shall be deemed to create a co-ownership of a chattel, the Horse, and not a partnership. The Co-Owners and their respective successors in interest, including personal representatives, heirs and assigns, each hereby waive any right to demand the partition or sale for partition of the Horse, and hereby agree that the sole and adequate means by which any Co-Owner may divest himself of his interest in the Horse shall be by the transfer of his interest subject to the further terms and condition of this Agreement.]

    R. MISCELLANEOUS

    This Agreement (a) may be executed in any number of counterparts, all of which together shall constitute one original contract; (ii) embodies the entire agreement and understanding among the parties; and (iii) shall be governed by, and construed in accordance with, the laws of the State of Texas.

    S. SIGNATURES

    CO-OWNER 1: CO-OWNER 2:

___________________________________ ___________________________________

    [CO-OWNER 1 NAME] [CO-COWNER 2 NAME]

[or, if Co-Owner 1 is a corporate entity] [or, if Co-Owner 2 is a corporate entity]

[NAME OF CO-OWNER 1 ENTITY] [NAME OF CO-OWNER 2 ENTITY]

By:___________________________ By:___________________________

    [PERSON SIGNING FOR CO-OWNER 1] [PERSON SIGNING FOR CO-OWNER 2]

Its:___________________________ Its:___________________________

    _____________________________________________________________________________________________ CO-OWNER’S AGREEMENT - Page 5 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

    [TITLE/POSITION OF PERSON [TITLE/POSITION OF PERSON SIGNING] SIGNING]

CO-OWNER 3:

___________________________________

    [CO-OWNER 3 NAME]

[or, if Co-Owner 3 a corporate entity]

[NAME OF CO-OWNER 3 ENTITY]

By:___________________________

    [PERSON SIGNING FOR CO-OWNER 3]

Its:___________________________

    [TITLE/POSITION OF PERSON

    SIGNING]

_____________________________________________________________________________________________

    CO-OWNER’S AGREEMENT - Page 6 of 6

    (2007) Alison M. Rowe, Attorney at Law (214) 295-3090 www.alisonrowe.com

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